Boris Yeltsin, president of Russia from 1991 to 1999, famously urged the various ethno-jurisdictions in the Russian Federation to “take all the sovereignty you can swallow.” At the time, the political leadership in Chechnya took this exhortation literally, an interpretation that contributed to the outbreak of war between the secessionist regime in Grozny and the Russian state in 1994. Since 1999, Vladimir Putin has replaced Yeltsin’s controversial sovereignty mantra with one that might be articulated as follows: “take all the subsidies you can swallow.” The extent of the Russian government’s continued subsidization of the North Caucasus has become a matter of serious political debate in recent months.  

BACKGROUND: Earlier this year, Russia’s Ministry for Regional Development announced a plan to invest 3.9 trillion roubles (approximately US$ 141.2 billion) in the North Caucasus over the next fourteen years. This plan has been received sceptically by the Ministry of Finance and the Ministry for Economic Development and Trade but appears to have the support of Prime Minister Putin. Having recently announced his intention to return to the presidency next year, Putin is beyond question the most influential personality in Russian politics. His support for this ambitious program is therefore significant. Set to run until 2025, the plan foresees the Russian exchequer funding approximately 67 percent of the 3.9 trillion rouble total; approximately 28 percent will be sourced from private investors, while the remainder will be derived from local governments in Dagestan, Chechnya, Ingushetia and other jurisdictions in the North Caucasus.

Some economists have predicted that the program will enlarge Russia’s budget deficit; they have also warned that taxes might have to be increased in 2012 to cover its costs. More significantly, the economic ministries in the Russian government have also reacted negatively. A senior official in the ministry of finance told reporters that her department would not approve the program to the tune of 3.9 trillion roubles, adding that “everything will be within budgetary limits.” A source in the Ministry for Economic Development and Trade, meanwhile, warned that the plan might be unaffordable. A second source within this ministry reported that department officials were “so far pessimistic” about the plan, again warning that it may be too costly, “even in an election year.” This last remark suggests that there is a body of opinion within the Russian government that believes this plan to be a piece of electoral grandstanding by the ruling elite in anticipation of upcoming presidential and parliamentary elections.

In October, a lobby group known as the Russian Civil Union held a demonstration in Moscow under the slogan “Stop feeding the Caucasus.” Protestors likened the North Caucasus to “a voracious crocodile which demands more blood and money.” Although the Russian Civil Union remains a fringe political movement, the rally received considerable media publicity and succeeded in provoking an official response from the Russian government. “I am embarrassed when they accuse us of showering the Caucasus with money,” remarked Alexander Khloponin, a Deputy Prime Minister and President Medvedev’s plenipotentiary representative to the North Caucasus Federal District, “that is an absolutely incorrect opinion.” Meanwhile, President Medvedev went a step further and condemned the Civil Union directly, claiming that the organisation is comprised of “saboteurs” whose political propaganda threatens the integrity of the Russian state.

IMPLICATIONS: The proposed “2025 state program” for the development of the North Caucasus appears to have galvanized an undeclared economic caucus within the Russian government into breaking ranks with their colleagues by making their opposition to this plan known publicly. This economic caucus is not particularly well coordinated and does not appear to have a figurehead, although several influential politicians are sympathetic to its agenda. Sympathisers include Alexei Kudrin, who recently relinquished his post as Minister of Finance at the request of President Medvedev, and Dmitri Kozak, a deputy prime minister in the Russian government who has previously criticized political leaders in the North Caucasus for their economic profligacy, even suggesting that funds earmarked for the region might be diverted instead to other jurisdictions within the Russian Federation. Kozak has also been critical of the process by which subsidies are disbursed to Russia’s regions in general, recommending that such funds are in the future made available by way of an incentivized financial arrangement based on economic prudence and ingenuity.

Attempts by this amorphous constituency to assert itself might be hampered by Kudrin’s unexpected departure from government in September, although it should be emphasized that Medvedev’s decision to request Kudrin’s resignation had nothing to do with the proposed implementation of this controversial program. Debate concerning the implementation of the program will be restricted to the intra-governmental commission on the socio-economic development of the North Caucasus Federal District. Chaired by Putin, this commission includes, inter alia, Alexander Khloponin, government ministers with responsibility for the economic ministries, and the leaders of Chechnya, Dagestan and Ingushetia. It has been reported that these three jurisdictions are to receive the lion’s share of the 3.9 trillion roubles, with approximately one third of these funds earmarked for the republic of Dagestan where the security situation has become especially fraught over the past several years. Other republics in the North Caucasus will therefore receive only a fraction of the grand total.

It is likely that the 2025 state program will eventually be sanctioned by the Government Commission overseeing the North Caucasus Federal District, although the proposed sum of 3.9 trillion roubles will probably be revised downwards. Putin may yet deem it politically astute to allow his successor as premier – presumably Dmitri Medvedev – to sign off on this controversial plan. During a meeting with Putin in late October, the president of Dagestan suggested that the implementation of the program might be delayed until 2015, and a source in Alexander Khloponin’s department has recently revealed that the plan will not be approved in 2011.

CONCLUSIONS: The protests organized by the Russian Civil Union and its partners make for remarkable news stories and are certainly of interest to those concerned with the situation in the North Caucasus and how it is affecting Russian society at large. It would be mistaken, however, to suggest that these sporadic and rather sparsely attended protests are somehow driving official state policy in relation to the North Caucasus. Instead, these public demonstrations have served as an opportune backdrop to this recent round of bureaucratic infighting concerning the fiscal sagacity of the proposed 2025 state program. Until such time as the Civil Union and other likeminded political lobby groups receive overt political backing from within Russian officialdom, they are unlikely to wield any significant influence over policymaking in this sphere.

The most significant aspect of this ongoing controversy is how it has revealed cleavages within the relatively small constituency of officials responsible for decision making in relation to the North Caucasus – cleavages which have seldom been as apparent since Putin became Russia’s preeminent political actor in 1999-2000.

The current difference of opinion within the Russian government will likely be resolved by means of a political compromise. The program will surely be approved, though probably not to the tune of 3.9 trillion roubles. In any case, analysts of the strategic relationship between Moscow and the North Caucasus should not forget this public disagreement between government ministries, for it recommends at the very least a definite potential for a plurality of opinion within Russia’s political elite in relation to the formulation and implementation of state policy in the North Caucasus.

AUTHOR’S BIO: Kevin Daniel Leahy holds a postgraduate degree from University College Cork, Ireland.